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The U.S. Administration is currently reviewing a request from Chevron to potentially allow the U.S. oil giant to take and trade crude from Venezuela as a form of payment for the millions of dollars the South American producer owes Chevron for its joint ventures there, Reuters reported on Monday, quoting sources with knowledge of the talks.
Chevron is the last remaining U.S. oil producer with staff and offices in Venezuela and has a joint venture with the local state-controlled oil firm PDVSA.
The U.S. major is now lobbying with the Biden Administration to be allowed sanctions relief and be able to take and trade Venezuelan crude as a means to recover the dividends and payments it is owed by the joint venture with PDVSA, according to Reuters’ sources.
The administration has an incentive to ease some of the sanctions on Venezuela, most importantly, to bring something to the negotiating table with the Venezuelan regime, one of those sources told Reuters.
Yet, some officials in the Biden administration are not inclined to the Administration’s easing of the sanctions in any way, at least not until Nicolas Maduro makes first steps toward ensuring democratic elections, the sources added.
Last week, reports emerged that Chevron was in talks with the Venezuelan government to gain more control over their joint venture and help Caracas boost oil production.
Bloomberg reported that the negotiations are being led by the chief of Chevron’s Venezuelan division, Javier La Rosa, and PDVSA’s president, Asdrubal Chavez, according to unnamed sources in the know.
The two had discussed PDVSA giving the U.S. supermajor greater control over the joint operation in exchange for some debt relief. For now, however, the negotiations are informal because Chevron would need a sanctions waiver to make any formal commitments.
Chevron and PDVSA operate four oilfields together. Before U.S. sanctions, these produced around 200,000 bpd, according to Bloomberg. Now, they are producing around 140,000 bpd, the report also said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com